LOAN AND SECURITY AGREEMENT by and among VISUAL NETWORKS, INC., VISUAL NETWORKS INTERNATIONAL OPERATIONS, INC., VISUAL NETWORKS OPERATIONS, INC., AVESTA TECHNOLOGIES, LLC, and NET2NET, LLC, as Borrowers and SILICON VALLEY BANK, as Bank June 17, 2005

individual loan arrangements which would otherwise be required if obtainable would substantially reduce the value to such Persons of the Credit Extension.

2.7 Primary Obligations.

          The obligations and liabilities of each Person included in the term “Borrower” shall be primary, direct and immediate, shall not be subject to any counterclaim, recoupment, set off, reduction or defense based upon any claim that such Person may have against any one or more of the other Persons included in the term “Borrower”, Bank and/or any other guarantor and shall not be conditional or contingent upon pursuit or enforcement by Bank of any remedies it may have against Persons included in the term “Borrower” with respect to this Agreement, or any of the other Loan Documents, whether pursuant to the terms thereof or by operation of law. Without limiting the generality of the foregoing, Bank shall not be required to make any demand upon any of the Persons included in the term “Borrower”, or to sell the Collateral or otherwise pursue, enforce or exhaust its or their remedies against the Persons included in the term “Borrower” or the Collateral either before, concurrently with or after pursuing or enforcing its rights and remedies hereunder. Any one or more successive or concurrent actions or proceedings may be brought against each Person included in the term “Borrower”, either in the same action, if any, brought against any one or more of the Persons included in the term “Borrower” or in separate actions or proceedings, as often as Bank may deem expedient or advisable. Without limiting the foregoing, it is specifically understood that any modification, limitation or discharge of any of the liabilities or obligations of any one or more of the Persons included in the term “Borrower”, any other guarantor or any obligor under any of the Loan Documents, arising out of, or by virtue of, any bankruptcy, arrangement, reorganization or similar proceeding for relief of debtors under federal or state law initiated by or against any one or more of the Persons included in the term “Borrower”, in their respective capacities as borrowers and guarantors under this Agreement, or under any of the Loan Documents shall not modify, limit, lessen, reduce, impair, discharge, or otherwise affect the liability of any other Borrower under this Agreement in any manner whatsoever, and this Agreement shall remain and continue in full force and effect. It is the intent and purpose of this Agreement that each Person included in the term “Borrower” shall and does hereby waive all rights and benefits which might accrue to any other guarantor by reason of any such proceeding, and the Persons included in the term “Borrower” agree that they shall be liable for the full amount of the obligations and liabilities under this Agreement regardless of, and irrespective to, any modification, limitation or discharge of the liability of any one or more of the Persons included in the term “Borrower”, any other guarantor or any other obligor under any of the Loan Documents, that may result from any such proceedings.

     2.8 Fees.

          Borrowers will pay:

          (a) Facility Fee. A fully earned, nonrefundable fee in the amount of Forty Thousand Dollars ($40,000), payable on the Closing Date.

          (b) [***]

          (c) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and reasonable expenses) incurred through and after the date of this Agreement, are payable when due.

3. CONDITIONS OF LOANS

     3.1 Conditions Precedent to Initial Credit Extension.

          Bank’s obligation to make the initial Credit Extension is subject to:

          (a) this Agreement;

          (b) the Revolving Promissory Note

          (c) a certificate of the Secretary or member, as applicable, of each Borrower with respect to articles of incorporation, operating agreement, bylaws, incumbency and resolutions authorizing the execution and delivery of this Agreement;

          (d) financing statements (Forms UCC-1);

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.

          (e) insurance certificates;

          (f) payment of the fees and Bank Expenses then due specified in Sections 2.8(a) and 2.8(c) hereof;

          (g) Certificate of Foreign Qualification (if applicable); and

          (h) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

     3.2 Conditions Precedent to First Advance During Formula Period.

          In addition to the conditions precedent in Section 3.1 hereof, Bank’s obligation to make the initial Advance during Formula Period is subject to:

          (a) Bank shall have received written confirmation from the Company that all existing holders of the Senior Secured Convertible Debentures have been paid in full; and

          (b) Bank has a first priority security interest on the Collateral (subject only to Permitted Liens).

     3.3 Conditions Precedent to all Credit Extensions.

          Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:

          (a) timely receipt of any Payment/Advance Form; and

          (b) the representations and warranties in Section 5 must be true on the date of the Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrowers’ representation and warranty on that date that the representations and warranties of Section 5 remain true.

4. CREATION OF SECURITY INTEREST

     4.1 Grant of Security Interest.

          Each Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of Borrowers’ duties under the Loan Documents, which in accordance with the provisions of Section 12.11, prior to the repayment in full of the Senior Secured Convertible Debentures are pari pasu with the rights of the holders of the Senior Secured Convertible Debentures. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. Bank upon the occurrence and during the continuance of any Event of Default, may place a “hold” on any deposit account of any Borrower maintained with Bank. If this Agreement is terminated, Bank’s lien and security interest in the Collateral will continue until Borrowers fully satisfy their Obligations.

     4.2 Authorization to File.

          Each Borrower authorizes Bank to file financing statements without notice to any Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect Bank’s interest in the Collateral.

     4.3 Release of Intellectual Property.

          Bank agrees that during the Formula Period upon written request of Borrowers, Bank will file partial releases, at Borrowers’ expense, on its Lien on the Intellectual Property, provided that no Event of Default shall have occurred and be continuing at such time.

5. REPRESENTATIONS AND WARRANTIES

          Each Borrower represents and warrants as follows:

     5.1 Due Organization and Authorization.

          Each Borrower and each Subsidiary is duly existing and in good standing in the state set forth in the first page of this Agreement and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. Each Borrower and each Subsidiary’s exact legal name is as set forth on the first page of this Agreement. The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with any Borrower’s formation documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which, or by which it is bound, in which the default could reasonably be expected to cause a Material Adverse Change.

     5.2 Collateral.

          (a) Each Borrower has good title to its Collateral, free of Liens except Permitted Liens. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. No Borrower has any notice of any actual or imminent Insolvency Proceeding of any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All Inventory is in all material respects of good and marketable quality, free from material defects.

          (b) In addition, during the Non-Formula Period only:

     (i) except as noted on the Schedule, no Borrower is a party to, nor is bound by, any material license or other material agreement with respect to which any Borrower is the licensee that prohibits or otherwise restricts such Borrower from granting a security interest in that Borrower’s interest in such license or agreement or any other property; and

     (ii) each Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each Patent is valid and enforceable and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and except as set forth in the Schedule no claim has been made that any part of the Intellectual Property violates the rights of any third party, except to the extent such claim could not reasonably be expected to cause a Material Adverse Change.

     5.3 Litigation.

          Except as set forth in the Schedule, there are no actions or proceedings pending or, to the knowledge of any Borrower’s Responsible Officers, threatened by or against any Borrower or any Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material Adverse Change.

     5.4 No Material Adverse Change in Financial Statements.

          All consolidated financial statements for any Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects Company’s consolidated financial condition and Company’s consolidated results of operations. There has not been any material deterioration in any Borrower’s consolidated financial condition since the date of the most recent consolidated financial statements submitted to Bank.

     5.5 Solvency.

          The fair salable value of Borrowers’ assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrowers are not left with unreasonably small capital after the transactions in this Agreement or any of the Loan Documents; and Borrower is able to pay its debts (including trade debts) as they mature.

     5.6 Regulatory Compliance.

          No Borrower is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. No Borrower is engaged as one of its important activities in

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extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Each Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Each Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of any Borrower’s or any Subsidiary’s properties or assets has been used by any Borrower or any Subsidiary or, to the best of any Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Except as set forth in the Schedule, each Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Each Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change.

     5.7 Subsidiaries.

          No Borrower owns any stock, partnership interest or other equity securities except for Permitted Investments.

     5.8 Full Disclosure.

          No written representation, warranty or other statement of any Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written statements to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading. It being recognized by Bank that the projections and forecasts provided by any Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected and forecasted results.

     5.9 Securities Purchase Agreement Transaction.

          Bank has received true and correct copies of the Securities Purchase Agreement and each of the other Security Purchase Agreement Documents, executed, delivered and/or furnished on or before the Closing Date in connection with the Securities Purchase Agreement Transaction. Neither the Securities Purchase Agreement nor any of the other Securities Purchase Agreement Documents have been modified, changed, supplemented, canceled, amended or otherwise altered or affected, except as otherwise disclosed to Bank in writing on or before the Closing Date. The Securities Purchase Agreement Transaction has been effected, closed and consummated pursuant to, and in accordance with, the terms and conditions of the Securities Purchase Agreement and with all applicable laws.

6. AFFIRMATIVE COVENANTS

          Borrowers will do all of the following for so long as Bank has an obligation to make any Credit Extension, or there are outstanding Obligations:

     6.1 Government Compliance.

          Each Borrower will maintain its and all Subsidiaries’ legal existence and good standing as a Registered Organization in only the State set forth on the first page of this Agreement and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on any Borrower’s business or operations. Each Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on any Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change. The Borrower may merge any Borrower or any Subsidiary of a Borrower into any other Borrower or dissolve any Borrower if substantially all of the assets of such Borrower are first transferred to any other Borrower.

     6.2 Financial Statements, Reports, Certificates.

          (a) Company will deliver to Bank: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Company’s consolidated operations during the period certified by a Responsible Officer and in a

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form acceptable to Bank; (ii) as soon as available, but no later than ninety (90) days after the last day of Company’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (iii) as soon as available, but no later than ninety (90) days after the last day of Company’s fiscal year, the Company’s 10-K filing; (iv) a prompt report of any legal actions pending or threatened against any Borrower or any Subsidiary that could result in damages or costs to any Borrower or any Subsidiary of $500,000 or more; and (v) budgets, sales projections, operating plans or other financial information Bank reasonably requests; and (vi) during the Non-Formula Period only, prompt notice of any material change in the composition of the Intellectual Property, including any subsequent ownership right of any Borrower in or to any Copyright, Patent or Trademark not shown in any intellectual property security agreement between Borrowers and Bank or knowledge of an event that materially adversely affects the value of the Intellectual Property. Bank agrees that information received by Bank pursuant to this Section will be subject to the provisions of Section 12.8 of this Agreement.

          (b) Within thirty (30) days after the last day of each month, Company will deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer of Company in the form of Exhibit C, with aged listings of accounts receivable and accounts payable.

          (c) Within thirty (30) days after the last day of each month, Company will deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer of Company in the form of Exhibit D.

          (d) Allow Bank to audit Borrowers’ Collateral at Borrower’s expense. Such audits will be conducted no more often than every six (6) months unless an Event of Default has occurred and is continuing.

     6.3 Inventory; Returns.

          Borrowers will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between any Borrower and its account debtors will follow each Borrower’s customary practices as they exist at execution of this Agreement. Company must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more than $200,000.

     6.4 Taxes.

          Each Borrower will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (other than taxes and assessments which any Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will deliver to Bank, on demand, appropriate certificates attesting to the payment.

     6.5 Insurance.

          Each Borrower will keep its business and the Collateral insured for risks and in amounts standard for such Borrower’s industry, and as Bank may reasonably request. Insurance policies will be in a form, with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an additional loss payee and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least twenty (20) days notice before canceling its policy. At Bank’s request, Borrowers will deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank’s option, be payable to Bank on account of the Obligations.

     6.6 Primary Accounts.

          Each Borrower will maintain its primary operating and investment accounts with Bank.

     6.7 Financial Covenants.

          During the Formula Period only, Borrowers will maintain as of the last day of each month (unless otherwise stated below):

          (a) Liquidity Ratio. A Liquidity Ratio of at least 1.50 to 1.00.

          (b) Minimum Revenue: Borrowers will achieve minimum ninety (90) day rolling revenue of not less than the following amounts for each of the following periods:

		Ninety day
Period		Rolling Revenue
June 30, 2005,		$	10,250,000;
July 31, 2005 and
August 31, 2005
September 30, 2005 and		$	11,000,000;
October 31, 2005
November 30, 2005 and		$	11,250,000
December 31, 2005

          In addition to any and all other rights and remedies of Bank under the Loan Documents, in the event Borrower fails to comply with the obligations of Section 6.7, [***].

     6.8 Subordination of Inside Debt.

          All present and future indebtedness of Borrowers to its officers, directors and shareholders (other than Indebtedness currently outstanding under the Senior Secured Convertible Debentures) (“Inside Debt”) shall, at all times, be subordinated to the Obligations pursuant to a subordination agreement on Bank’s standard form. Borrowers represent and warrant that there is no Inside Debt presently outstanding. Prior to incurring any Inside Debt in the future, Borrowers shall cause the Person to whom such Inside Debt will be owed to execute and deliver to Bank a subordination agreement on Bank’s standard form.

     6.9 Registration of Intellectual Property Rights.

          During the Non-Formula Period only, each Borrower:

          (a) shall not register any Copyrights with the United States Copyright Office unless it: (i) has given at least fifteen (15) days’ prior notice to Bank of its intent to register such Copyrights and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank’s security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application(s) with the United States Copyright Office. Each Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for Bank to maintain the perfection and priority of its security interest in such Copyrights;

          (b) shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or to register a trademark or service mark within thirty (30) days of any such filing; and

          (c) will (i) protect, defend and maintain the validity and enforceability of the Intellectual Property and promptly advise Bank in writing of material infringements and (ii) not allow any Intellectual Property material to each Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

     6.10 Additional Provisions Regarding Collateral.

          (a) Borrowers will provide written notice to Bank within thirty (30) days of entering or becoming bound by any such license or agreement which are reasonably likely to have a material impact on Borrowers’ business or financial condition (other than over-the-counter software that is commercially available to the public).

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.